Monday, June 29, 2009

Senate Save America!!!

After Fridays House of Representatives vote on Climate Control Bill which passed 219-212. A group of reporters conducted an interview of President Obama, Energy Secretary Steven Chu, and White House coordinator of energy Carol Browner. President Obama stated (http://www.nytimes.com/2009/06/29/us/politics/29climate-text.html?pagewanted=1&ref=politics), in regards to the passing of the bill, “I think this was an extraordinary first step.” While I watched the debate on the House floor on Friday, deals were being cut on the House floor for future consideration and even leaving an open line in the bill if were to pass to insert a place for an earmark for a Florida research center on hurricanes.

The bill that passed was written to emulate Spain’s efforts to create “Green Jobs” while controlling carbon emissions. Gabriel Calzada Alvarez, PhD, published a report on Spain’s outcomes of their “green” jobs initiatives called Study of the effects on employment of public aid to renewable energy sources. http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf In the Executive Summary, the “study’s results demonstrate how such “green jobs” policy clearly hinders Spain’s way out of the current economic crisis, even while U.S. politicians insist that rushing into such a scheme will ease their own emergence from the turmoil.”

President Obama, and others in Congress, touts the Climate Control Bill as a job creation bill. Yes, it will create jobs in the new “green” sector. The bigger question is will the bill have a net positive in jobs. According to Dr. Alvarez’s study, Spain has seen “9 jobs lost for every 4 created” in the energy industry while leading to an additional “2.2 jobs destroyed for every “green job” created” elsewhere in the economy.

Many on the House floor on Friday argued that it “taxes” Americans. Now there is not straight out tax on consumers but there is on the producers of energy through the permits they will need to purchase. In every business model I have seen, not one has it where the company will absorb the price of purchasing carbon permits. The cost will passed along to the consumer in rate hikes. Some companies are already trying to get ahead of the curve by raising rates now.

While everyone agrees that America’s dependence on foreign oil promotes security risks to the future of the United States, the question is Congress prepared to pass a net-job loss bill that will drive up energy costs (total amount is up for discussion) and drive industry to countries, China or India, that do not have the same emission standards. Now to help level the playing field the Climate Control Bill does provide for tariffs of goods from countries that do not meet the new U.S. standards.

During the group reporter interview on Sunday with President Obama, a reporter asked, “One of the provisions that got added very late to this bill that senators had expressed some reservations about was the one that puts tariffs on goods imported from countries that don’t have these sorts of restrictions. What do you think of that revision and would you like to see the Senate strip it out?”

President Obama responded by saying, “At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there. “ One of the Obama’s campaign promises was to keep jobs in the United States and penalize companies that ship jobs overseas. An argument against the Climate Change Bill was that companies will move their factories to countries with lower energy costs.

This argument is echoed in Dr. Alvarez’s study as Spain saw several companies, Ferroatlantica and Grupo Celsa, move parts of their operations to other countries. The two mentioned went to France where nuclear power is the prime energy source. While America will see an increase in “green jobs” mainly because the industry doesn’t really exists. The trouble, as demonstrated by Dr. Alvarez’s study, is the net is a job loss and increases costs to lower and middle class.